La Jolla Story

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LJPC -- USA Stock  

USD 6.80  0.34  5.26%

Given the investment horizon of 60 days La Jolla is expected to generate 5.38 times more return on investment than the market. However, the company is 5.38 times more volatile than its market benchmark. It trades about 0.08 of its potential returns per unit of risk. The DOW is currently generating roughly 0.14 per unit of risk. While many risk-averse investors are getting carried away by overanalyzing healthcare space, it is reasonable to go over La Jolla Pharmaceutical. We are going to analyze if the current expected returns justify La Jolla's volatility.
Published over a week ago
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La Jolla (NASDAQ:LJPC) high volatility trend continues
The company currently holds 126.66 M in liabilities with Debt to Equity (D/E) ratio of 7.16, indicating La Jolla may have difficulties to generate enough cash to satisfy its financial obligations. La Jolla Pharmaceutical has a current ratio of 2.21, suggesting that it is liquid enough and is able to pay its financial obligations when due. On a scale of 0 to 100, La Jolla holds a performance score of 5. The company owns a Beta (Systematic Risk) of 2.1173, which conveys a somewhat significant risk relative to the market. Let's try to break down what La Jolla's beta means in this case. As the market goes up, the company is expected to outperform it. However, if the market returns are negative, La Jolla will likely underperform. Although it is vital to follow La Jolla Pharmaceutical existing price patterns, it is good to be conservative about what you can do with the information regarding equity price patterns. The approach towards estimating future performance of any stock is to evaluate the business as a whole together with its past performance, including all available fundamental and technical indicators. By reviewing La Jolla Pharmaceutical technical indicators, you can at this time evaluate if the expected return of 0.46% will be sustainable into the future. Please exercises La Jolla Pharmaceutical coefficient of variation, potential upside, rate of daily change, as well as the relationship between the sortino ratio and skewness to make a quick decision on whether La Jolla Pharmaceutical current price history will revert.
Volatility is a rate at which the price of La Jolla or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of La Jolla may increase or decrease. In other words, similar to La Jolla's beta indicator, it measures the risk of La Jolla and helps estimate the fluctuations that may happen in a short period of time. So if prices of La Jolla fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our technical analysis page.

How important is La Jolla's Liquidity

La Jolla financial leverage refers to using borrowed capital as a funding source to finance La Jolla Pharmaceutical ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. La Jolla financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between La Jolla's total debt and its cash.

How La Jolla utilizes its cash?

To perform a cash flow analysis of La Jolla, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash La Jolla is receiving and how much cash it distributes out in a given period. The La Jolla cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities. La Jolla Net Cash Flow from Operations is projected to decrease significantly based on the last few years of reporting. The past year's Net Cash Flow from Operations was at (76.45 Million)

La Jolla Volatility Drivers

La Jolla unsystematic risk is unique to La Jolla Pharmaceutical and usually not directly affected by the market or economic environment. An example of unsystematic risk is the possibility of poor earnings or a layoff due to coronavirus. One may mitigate nonsystematic risk by buying different securities in the same industry or by buying in different sectors. For example, if you have a position in La Jolla you can also buy Dynavax Technologies Corporation. You can also mitigate this risk by investing in the biotechnology sector as well as in companies having nothing to do with it. This type of risk is also called diversifiable risk and can be understood from analyzing La Jolla important indicators over time. Here we run a correlation analysis between relevant fundamental ratios over at least ten year period to find a relationship in the way they react to changes in La Jolla income statement and balance sheet. Here are more details about La Jolla volatility.
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